Valuation of Stock
Cisco Systems

The stock valuation project calls for the choosing of a stock, and I have chosen Cisco Systems. This company is traded on the NASDAQ under the ticker symbol of CSCO. I wanted to choose a stock that is an important part of the business environment. I wanted a growth stock, and looked to technology, but I also wanted to pick something that was a bit under the radar. Cisco fits that bill because it does not sell to consumers, but mainly to other tech companies. In that sense, Cisco is a bellwether stock for the entire technology business.

General Description of the Economy

The general economy is in a state of downturn. The downturn began in 2007-2008 when the financial crisis emerged. This caused a credit crunch, and then job losses. Unemployment and uncertainty saw the reduction of the overall health of the economy. Since that point, recovery has…...

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Works Cited:

Duffy, J. (2010). Cisco's top 10 rivals. Network World. Retrieved July 27, 2013 from  http://www.networkworld.com/news/2010/101310-cisco-rivals.html

Stock Valuation
Scholastic Corporate (NASDAQ: SCHL) is an educational publishing firm based in the United States. In order to make an investment recommendation on this stock, a number of different techniques can be used to analyze its financial performance. These include ratio analysis, for which three ratios will be chosen, and trend analysis for the past three years. The stock is currently trading at $26.41, its lowest level since August of 2010, but substantially higher than its levels at the depths of the recession in early 2009. The company has a beta of 1.31, indicating that it is more volatile than the market in general. The three ratios that will be examined are the current ratio, which measures liquidity, the net margin, which measures profitability and the return on equity, which measures the ability of the firm to convert its equity into profit.

The current ratio for Scholastic is 2.27. This compares…...

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Works Cited:

MSN Moneycentral: Scholastic Corporation (2011). Retrieved May 15, 2011 from  http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?symbol=schl

Stock Valuation
The insights and expertise of Kathleen Collings-Lang in the video Stock Valuation are invaluable in gaining insights into the similarities and differences of how bonds and stocks are valued today, emerging trends in these fields, and the critical role of quantitative analysis in determining the value of equity investments. The valuation of stock and equity investments is more accurate when qualitative and quantitative factors are taken into account (Fielitz, Muller, 1985). Ms. Collings-Lang accentuates this point in her discussion of stock valuation techniques, indicating that the selection of a dividend discount rate, which can is often subjective, is integral to the dividend discount model being correctly used to value a given stock. She alludes to the fact that the selection of a dividend discount rate also must take into account he nuanced and highly specific factors impacting a business, seasonality being one of the most significant for capital-intensive businesses…...

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Bibliography

Chen, Z., & Jindra, J. (2010). A valuation study of stock market seasonality and the size effect. Journal of Portfolio Management, 36(3), 78-92, 10.

Fielitz, B.D., & Muller, F.L. (1985). A simplified approach to common stock valuation. Financial Analysts Journal, 41(6), 35.

Stock Valuation
The stock that I chose is PepsiCo. I was drinking a Pepsi when I was thinking about a stock to do, and it just seemed like a good idea. That is why I picked the stock, but PepsiCo (PEP on the NYSE) is a major blue chip stock so there is no reason why I shouldn't pick it. The current stock price of PepsiCo is $85.31

PepsiCo is in the food and beverage industry. They manufacture, bottle and distribute mostly soft drinks and snacks. According to the annual report, the company is split 51% food and 49% beverage and has the same split for U.S. revenue and non-U.S. revenue. Two-thirds of the company's business comes from the Americas. Frito-Lay is the major food company and Pepsi is the major beverage company. The company also owns Quaker Oats, which is the owner of Gatorade and Tropicana. This is considered the "healthy"…...

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References

Bureau of Labor Statistics. Main page retrieved from  http://www.bls.gov/ 

Bureau of Economic Analysis. Main page retrieved from  http://www.bea.gov/ 

Fredrix, E. (2010). PepsiCo to buy bottlers in deals totaling $7.8b. ABC News. Accessed July 27, 2013 from  http://abcnews.go.com/Business/story?id=8248142&page=1 

Gangar, S. (2013). Pepsi raises $1.7 billion in fixed, floating-rate bond offering. Bloomberg. Retrieved July 27, 2013 from  http://www.bloomberg.com/news/2013-07-25/pepsi-said-to-offer-1-7-billion-of-bonds-in-two-part-sale-2-.html

Stock Valuation
The stock that I have chosen is Clorox (CLX), the bleach making company. I wanted to find a company that was about as classic a case of a no growth company as possible. Most of the high profile companies in the stock exchange are fast-growing companies, to the point where even those who have a flat domestic share are trying to grow internationally. I wanted to see if there was still a classic no growth company out there, and this was the first one I found.

Clorox is mostly a bleach company, but it has a few other brands that are also familiar to consumers. These include Brita, Burt's Bees, Glad, Pine Sol and Kingsford Charcoal. Most of these brands fit with the general corporate theme of slow-growing businesses in basic industries.

Clorox competes mostly in North America. The economy in the U.S. is the largest on the continent, though all…...

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References:

Investopedia. (2013). Dividend discount model. Investopedia. Retrieved July 26, 2013 from  http://www.investopedia.com/terms/d/ddm.asp 

Morningstar: Clorox. Retrieved July 26, 2013 from  http://financials.morningstar.com/valuation/price-ratio.html?t=CLX&region=USA&culture=en-U.S .

MSN Moneycentral: Clorox (CLX). Retrieved July 26, 2013 from  http://investing.money.msn.com/investments/stock-price?symbol=clx&ocid=qbeb 

Yahoo! Finance. Retrieved July 26, 2013 from  http://finance.yahoo.com/bonds

Firms, even in the same industry, can only be evaluated on the basis of their ratios when their business characteristics are relatively similar. This includes products, markets, responses to economic stimulus, cost of capital and a variety of other attributes. The further Citrus Glow is from its competitors on any key measure the less useful Dan's method becomes. Furthermore, Dan's assumptions regarding the firm's growth prospects are arbitrary, rather than based on accurate assessments of the firm's expected future performance.
4. Joe's variable growth rate approach takes the belief that investors only pay for the known cash flows, that is to say the dividends. In this case, the assumed dividend would begin at $1.50 per share. The terminal value is $8.83, giving the stock a value of $26.63. This sits above Lisa's number, and presumably somewhere below Dan's undisclosed number, since most of his totals are above this point.

5. Each…...

Walk Down Wall Street
Stock Valuation from the Sixties through the Nineties

Malkiel notes that there were a number of speculative trends from the 1960s to 1990s, and that they all mended up in the same way. Every few years, the stock market has another bubble or speculative mania which soon crashes and levels off, such as overvalued food stocks in the 1980s or the Nifty Fifty blue chips in the 1970s, but in both cases the speculative phase ended and stocks returned to their normal values. By the 1990s, institutions accounted for more than 90% of the trading volume on the NYSE, and yet professional investors participated in several distinct speculative movements from the 1960s through the 1990s. In each case, professional institutions bid actively for stocks not because they felt such stocks were undervalued under the firm foundation principles, but because they anticipated that some greater fools would take the…...

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REFERENCES

Malkiel, B.G. (2011). A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing. NY: Norton.

Yan, Z. A Random Walk Down Wall Street- The Get Rich Slowly but Surely Book

Company Valuation The valuation and method used to determine the Initial Public Offering (IPO) value of Facebook stock was based on numerous factors. First, it was a much-hyped IPO, with retail investors seeking to get in on the action that venture capitalists had already secured years prior through private investment. Everything connected in one way or another to Facebook was receiving attention, even Zynga, the one-hit wonder PC-game producer. Second, the company’s worth was measured by clicks and projected ad revenue as well as by the number of users of the company’s products. The company had stated a net income of $1 billion in 2011, up 65% year-over-year, indicating that it was steamrolling to profits. With 845 million monthly active users and 483 million daily active users, it was positioned as a great platform for advertsing. Its market cap, however, was a stagger $104 billion at the time of the IPO…...

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References

Cauwels, P., Sornette, D. (2012). Quis pendit ipsa pretia: Facebook valuation and

diagnostic of a bubble based on nonlinear demographic dynamics. Journal of Portfolio Management, 38(2): 56-66.

Cusumano, M. (2012). Reflecting on the Facebook IPO. Communications of the ACM,

55(10): 20-23.

Gajic, N., Budinski-Petkovic, L. (2013). Ups and downs of economic and

econophysics—Facebook forecast. Physica A: Statistical Mechanics and its Applications, 392(1): 208-214.

Krigman, L., Jeffus, W. (2016). IPO pricing as a function of your investment banks’

past mistakes: The case of Facebook. Journal of Corporate Finance, 38: 335-344.

Valuing Common Equity
Comparison of Lowes and The Home Depot

There are different methods that firms and investors can use to value the common equity that a corporation holds. The different methods all have strengths and weaknesses in different circumstances and it is important to understand these factors in any evaluation. For example, the company's future income stream will ultimately determine the company's fundamental value; however these calculations are not always what determines a firm's market price. Although there are many factors that determine the market price, the company's net present value (NPV) of future revenue streams can be useful to both investors and internal executives relative to managerial accounting. A company's NPV can be used to compare different direct investment opportunities as well as calculating an average cost of capital to serve as an investment baseline; whereas indirect valuation are more subject and often lie on whether investors believe the stock…...

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References

Ferris, K.; Petit, B. (2013, August 5). Valuation for Mergers and Acquistions: An Overview. Retrieved from Financial Times:  http://www.ftpress.com/articles/article.aspx?p=2109325&seqNum=6 

Investopedia. (N.d.). Complete Guide to Corporate Finance. Retrieved from Investopedia:  http://www.investopedia.com/walkthrough/corporate-finance/3/stock-valuation/common-stock-valuation.aspx 

van Doom, P. (2015, August 20). Opinion: Home Depot vs. Lowe's - which is the winner? Retrieved from Market Watch:  http://www.marketwatch.com/story/home-depot-vs.-lowes-which-is-the-winner-2015-08-19

Valuation eport
Identification of Subject Property

The subject site is an office property in Oakville, Ontario. It can be sold either in parts or as whole, and this report will consider the whole. The size of the whole building is 4016 square feet. The property is located on the service road adjacent to the Queen Elizabeth Way (QEW), a major highway in the region that links Toronto with the cities of Hamilton and Buffalo. The property can be subdivided into multiple units, at least three. There is a current tenant occupying 839 square feet and room for two more tenants or one primary occupant.

Market eview

The market for this type of property is relatively soft at present. The prevailing economic conditions are for sluggish growth, with some observers predicting a protracted housing correction and "muted business investment." The recent federal government budget has more cuts than spending, and the lack of fiscal stimulus…...

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References:

Colliers Canada:  http://www.collierscanada.com/8034 

CP. (2013). Leading forecaster sees bleak days for Canadian economy. CBC News. Retrieved April 30, 2013 from  http://www.cbc.ca/news/business/story/2013/04/09/business-bleak-outlook-capital-economics.html 

Dmitrieva, K. (2013). Toronto offices passing NYC on cheap funding. Bloomberg. Retrieved April 30, 2013 from  http://www.bloomberg.com/news/2013-02-01/toronto-offices-passing-nyc-on-cheap-funding-mortgages.html 

Goolsby, S. (2009). A summary real estate appraisal report. Earthworks Action. Retrieved April 30, 2013 from  http://www.earthworksaction.org/files/pubs-others/Appraisal12-11-2009.pdf

Valuation
There are a number of different factors that contribute to a stock's valuation in the market compared with the financial statements. One fundamental difference between the two is that the book value reflects past performance while the market reflects future performance. Book value of the company's equity is determined by the past profit performance of the stock and the amount of debt that the company has. The market value reflects the investor's expectations of the future cash flows that will accrue from owning one share of the company's stock (No author, 2011).

Valuing a firm's equity can be done using a number of techniques, each relying on different assumptions. The first of these is the Gordon growth model (or dividend discount model). This model assumes that stocks are valued based on their intrinsic value alone -- that the value of a company's stock is based only on the known dividend and…...

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Works Cited:

Fama, E. & French, K. (2006). The capital asset pricing model: Theory and evidence. Journal of Economic Perspectives. Vol. 18 (3) 25-46.

Investopedia (2011). Gordon growth model. Investopedia. Retrieved February 2, 2012 from  http://www.investopedia.com/terms/g/gordongrowthmodel.asp#axzz1lFGk3bQ3 

No author. (2011). Distinguish between market value and book value of equity securities. Want2Rich.com. Retrieved February 2, 2012 from  http://www.want2rich.com/2011/05/capital-markets/distinguish-between-the-market-value-and-book-value-of-equity-securities/

Valuation and Financial Statements
Shareholder Value

The question of shareholder interest as it pertains to a takeover bid is dependent on a variety of factors, not the least of which is the valuation of the company as determined by the board of directors and executive management. While current stock price plays a relevant role, valuation depends on analysis conducted in key areas including but not limited to: earnings multiple times EBITDA, price to book ratio, forward looking earnings guidance, and perhaps most crucial enterprise value. The current scenario of ABC Company pursuing the acquisition of XYZ Company for $35.00 a share, a $10.00 premium over the current $25.00 stock price, allows for an explication of these valuation techniques.

XYZ management believes that the $35.00 offer price is undervaluing the company and as such is not in the shareholder's interest. In identifying the rationale for this position a logical place to begin is the…...

Valuations
Question 1- Valuation - Valuation Using Comparable information- Valuation is a process of estimating worth of an asset. However, when valuing a company or organization there is no "one" correct way to accomplish the task. Each organization may have a different way of reporting historical information, and event financial statements prepared with GAAP show assets based on a more historical, rather than current, paradigm. Generally speaking, though, the valuation of financial assets is done using one of more of three models:

Absolute values -- These models focus on the present value of an asset's expected future cash flows -- using multiperiod models like discounted cash flow or single-period models like the Gordon model. Absolute values take into account objective issues and are quantitatively based, but are valuable as only a partial picture into the actual value of the asset and may not be transferable from one industry to the other.

elative models…...

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REFERENCES

A Basic Guide to Bank-Term Loans. (2012). Entrepreneur. Retrieved from:  http://www.entrepreneur.com/article/52728 

Chemmanur, T., et al. (2011). How Does Venture Capital Financing Improve Effeciency? Review of Financial Studies. 24 (12): 4037-90.

Edvisson, L., et al. (1997). Intellectual Capital: Realizing Your Company's True Value by Finding Its Hidden Brainpower. New York: Harper Collins.

Fernandez, P. (2002). Valuation Methods and Shareholder Value Creation. London, UK: Elsevier Publications.

It is expected that the bond will mirror the performance of the S & P. 500. ("Transaction History," 2010)
November 24, 2010

On November 24th several more new purchases would take place to include: General Motors, erkshire Hathaway, the Fidelity Immediate Government Fund and the Strategic Advisors Income Fund.

Stocks

General Motors was selected, because it could help to provide the portfolio with above average growth. The results were that that stock would see an increase of 1.4%. ("Transaction History," 2010)

erkshire Hathaway was purchased to provide the portfolio with stability and diversification. This investment is expected to outperform the major market averages. The results were up .96%.( "Transaction History," 2010)

Mutual Funds

The Fidelity Intermediate Government Fund was selected because of their focus on medium term Treasury investments. This is expected to underperform the market averages. The results were that the position declined by 2.55%. ("Transaction History," 2010)

The Strategic Advisors Income Fund was selected to…...

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Bibliography

Account Details. (2010). Stock Trak. Retrieved from:  http://www.stocktrak.com/private/account/summary.aspx 

Ford Posts 68% Rise in Third Quarter Income. (2010). MSNBC. Retrieved from:  http://www.msnbc.msn.com/id/39845528/ns/business-autos/ 

Transaction History. (2010). Stock Trak. Retrieved from:  http://www.stocktrak.com/private/account/transactionhistory.aspx 

Kavilanliz, P. (2010). Black Friday. CNN Money. Retrieved from:  http://money.cnn.com/2010/11/27/news/economy/Black_friday_2010_sales/

In general, P/E valuation is a common and reliable method for appraising a company's value, but, as with any method, caution must be exercised.

Discounted cash flow

The discounted-cash-flow method is arguably the most complex valuation model discussed in this paper, but it is often considered reliable because it considers a company's post-sale prospects (Calculating Discounted 2005). In the case of the previously discussed over-valued dot.com, it is easy to see where a potential buyer would eventually develop a cash-flow problem. The company is barely profitable, and it's going to take $5 million to purchase the company, likely creating some debt to be serviced. Perhaps a company with multiple business units would be capable of servicing that debt through the performance of the other units, but clearly the business being acquired could not service such debt through its own cash flow.

The discounted-cash-flow method works well because one of the things it does…...

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Works Cited

Berry, T. 2004, "Planning for Purchasing a Business," Bplans.com, viewed 20 May, 2007 at  http://www.bplans.com/bb/article.cfm/138 .

Bizquest Staff, No date, "Valuation Methodologies," BizQuest.com, viewed 19 May, 2007 at  http://www.bizquest.com/resource/valuation_methodologies-18.html .

Brooks Barristers No date, "Key Questions When Purchasing a Business," LexisNexis, viewed 20 May, 2007 at  http://business-law.lawyers.com/Key-Questions-When-Purchasing-a-Business.html .

Business Valuation Methods" No date, Second Venture Corp., viewed 20 May, 2007 at http://www.secondventure.com/business-valuation-methods.asp.